(Bloomberg) — Outgoing SEC Chair Gary Gensler has a word of caution for the next administration: be careful about messing with the guardrails that protect mom-and-pop traders.
Most Read from Bloomberg
Going too far in rolling back disclosure requirements or broadening the definition of who qualifies as an “accredited investor” could harm the public, Gensler said in an interview Friday.
Critics have contended the accredited investor rule, which seeks to protect retail traders from potential risks in private investments, stifles growth. Project 2025, an initiative intended as a policy blueprint for the incoming Trump administration, calls for financial regulators to broaden the definition of an accredited investor or eliminate restrictions altogether.
“Depending upon how far that goes, you can undermine this important part of our capital markets,” Gensler said, adding that adequate disclosures are paramount for investor confidence and market stability.
“Investors get to decide what risks to take as long as the issuers have been putting out full and fair, truthful disclosures,” Gensler said.
Company disclosures are a core part of the Securities and Exchange Commission’s regulations and how investors weigh risk. But privately held companies, including early-stage startups and others, are largely exempt from those disclosures.
Currently, people who reach certain professional or income thresholds, such as having over $1 million in net worth excluding their primary residence, may qualify as accredited investors.
When the definition was put in place in the 1980s, that was about 1% of the US population. The SEC estimated that more than 18% of US households would qualify in 2022.
Key lawmakers, including House Financial Services Committee Chairman French Hill, want to broaden the definition. Hill offered a bill in 2023 to let individuals who “demonstrated an understanding of the subject matter” invest in private markets.
Some proponents of updating the definition have also said it currently poses high hurdles for Black, Latino and other minority communities to build generational wealth.
In December, President-elect Donald Trump announced former SEC commissioner Paul Atkins as his pick to lead the agency. During his time as a commissioner and in the private sector, Atkins has spoken out about unnecessary corporate disclosures and how it hinders investment opportunities.
Story continues
Atkins’ leadership would likely contrast sharply with Gensler, who rolled out one of the most ambitious SEC agendas in recent memory. Some of the outgoing SEC chair’s regulations will leave a lasting imprint on finance while others have been stymied in courts.
Gensler is set to depart the agency on Jan. 20, when Trump takes office.
Most Read from Bloomberg Businessweek
©2025 Bloomberg L.P.